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[Federal Register Volume 86, Number 139 (Friday, July 23, 2021)]
[Proposed Rules]
[Pages 38958-38960]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-15490]

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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 1

RIN 2900-AR20

Threshold for Reporting VA Debts to Consumer Reporting Agencies

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: The Department of Veterans Affairs (VA) proposes to amend its 
regulations around the conditions by which VA benefits debts or medical 
debts are reported to consumer reporting agencies (CRA). The Johnny 
Isakson and David P. Roe, M.D. Veterans Health Care and Benefits 
Improvement Act of 2020 provides the Secretary authority to prescribe 
regulations that establish the minimum amount of a benefits or medical 
debt that the Secretary will report to the CRA. This proposed change 
will establish the methodology for determining a minimum threshold for 
debts reported to CRA.

DATES: Comments must be received on or before September 21, 2021.

ADDRESSES: Comments may be submitted through www.regulations.gov or 
mailed to Debt Management Center, Office of Management, 189, 1 Federal 
Drive, Suite 4500, Fort Snelling, MN 55111. Comments should indicate 
that they are submitted in response to ``RIN 2900-AR20--Threshold for 
Reporting VA Debts to Consumer Reporting Agencies. Comments received 
will be

[[Page 38959]]

available at regulations.gov for public viewing, inspection, or copies.

FOR FURTHER INFORMATION CONTACT: Jason Hoge, Director of Operations, 
Debt Management Center, Office of Management, 189, 1 Federal Drive, 
Suite 4500, Fort Snelling, MN 55111, (612) 725-4337. (This is not a 
toll-free telephone number.)

SUPPLEMENTARY INFORMATION:

Summary of Proposed Regulatory Changes

    We propose to amend VA's regulation that governs reporting of 
delinquent debts to CRA. This rulemaking would update the regulation to 
comply with section 2007 of Public Law 116-315, the Johnny Isakson and 
David P. Roe, M.D. Veterans Health Care and Benefits Improvement Act of 
2020. Section 2007 amends chapter 53 of title 38, United States Code by 
adding section 5320 as follows: ``The Secretary shall prescribe 
regulations that establish the minimum amount of a claim or debt, 
arising from a benefit administered by the Under Secretary for Benefits 
or Under Secretary for Health, that the Secretary will report to a 
consumer reporting agency under section 3711 of title 31.''
    This proposed amendment will establish the methodology for 
determining the minimum threshold for reporting certain VA debts to 
CRA. It will also exclude from the minimum threshold those debts in 
which there is an indication of fraud, misrepresentation, or bad faith 
on the part of the debtor.

Background on Governing Statutes

    The Debt Collection Improvement Act of 1996 (DCIA), in part, 
mandated agencies to report delinquent debts to CRA. 31 U.S.C. 3711(e); 
Sec. 31001(k), Public Law 104-134, 110 Stat. 1321. The purpose of the 
DCIA includes maximizing collection of delinquent debts by ensuring 
quick action to recover debts, use of appropriate collection tools, and 
minimizing the costs of debt collection. Sec. 31001(b), Public Law 104-
134.
    Section 5320 of title 38, United States Code, authorizes VA to 
``establish the minimum amount of a claim or debt, arising from a 
benefit administered by the Under Secretary for Benefits or Under 
Secretary for Health, that the Secretary will report to a consumer 
reporting agency under section 3711 of title 31.'' The intent of 
section 5320 is to lessen negative impact of CRA reports on Veterans.

Introduction to Proposed Regulatory Changes

    As explained in more detail below, we propose to amend 38 CFR 1.916 
to comply with 38 U.S.C. 5320, to establish a minimum threshold for 
reporting debts to CRA.
    In accordance with 31 U.S.C. 3711(e), the VA Debt Management Center 
(DMC) is responsible for reporting delinquent debts to CRA. Prior to 
January 5, 2021, DMC reported an average of 5,000 delinquent Veteran 
accounts monthly. DMC regularly receives complaints from Veterans whose 
accounts have been reported to CRA. Common complaints from Veterans 
include: Loss of security clearance, inability to obtain approval for 
home loans or home refinancing, and difficulty securing rental housing.
    This proposed amendment recognizes that the debts described in 38 
U.S.C. 5320 are fundamentally different from consumer debt. Debts 
arising from a benefit administered by the Under Secretary for Benefits 
or the Under Secretary for Health may result from a variety of 
scenarios, including overpayments that are not the fault of the 
Veteran.
    Section 5320 authorizes the Secretary to establish a minimum 
threshold that will ultimately reduce the number of debts that will be 
reported to CRA. This will, in turn, decrease the number of Veterans 
negatively impacted by these reports. The VA's mission is to ``care for 
those who shall have borne the battle and for their families and 
survivors.'' Negative credit reports may cause housing insecurity or 
job loss, and this result is inconsistent with VA's mission.

38 CFR 1.916-- Disclosure of Debt Information to Consumer Reporting 
Agencies (CRA)

    We propose to amend 38 CFR 1.916, which sets forth the requirements 
for reporting delinquent debts to CRA, by inserting subparagraphs 
(c)(1) through (3) to provide the methodology used by the Secretary to 
establish the minimum threshold. This section would also clarify that 
the minimum threshold applies only to a debt of an individual that 
arises from a benefit administered by the Under Secretary for Benefits 
or Under Secretary for Health.
    We propose subparagraphs (c)(1) through (3) state:
    1. The Secretary has established a minimum threshold for a debt, 
arising from a benefit administered by the Under Secretary for Benefits 
or Under Secretary for Health, that the Secretary will report to a 
consumer reporting agency under section 3711 of title 31.
    (2) VA will only report those debts that meet the following 
standards:
    (i) The debt is classified as currently not collectible. For 
purposes of this paragraph, the debt is currently not collectible if VA 
has exhausted available collection efforts, including, as appropriate, 
referrals for administrative offset and enforced collection;
    (ii) The debt is not owed by an individual who is determined by VA 
to be catastrophically disabled or has reported to VA a gross household 
income below the applicable geographically adjusted income limits that 
would entitle a VA beneficiary to cost-free health care, medications 
and/or beneficiary travel; and
    (iii) The outstanding debt amount is over $25, or such higher 
amount VA may from time to time prescribe, in accordance with section 
1.921 of this part.
    (3) The minimum threshold set forth in this paragraph will not 
apply if there is an indication of fraud, misrepresentation, or bad 
faith on the part of the individual in connection with the debt.

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, and other advantages; distributive impacts; 
and equity). Executive Order 13563 (Improving Regulation and Regulatory 
Review) emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
The Office of Information and Regulatory Affairs has determined that 
this rule is not a significant regulatory action under Executive Order 
12866. The Regulatory Impact Analysis associated with this rulemaking 
can be found as a supporting document at www.regulations.gov.

Regulatory Flexibility Act

    The Secretary hereby certifies that this proposed rule will not 
have a significant economic impact on a substantial number of small 
entities as they are defined in the Regulatory Flexibility Act (5 
U.S.C. 601-612). The regulations established by this rulemaking do not 
impose burdens or otherwise regulate the activities of any small 
entities outside of VA. Therefore, pursuant to 5 U.S.C. 605(b), the 
initial and final regulatory flexibility analysis requirements of 5 
U.S.C. 603 and 604 do not apply.

[[Page 38960]]

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any one year. This proposed rule will have no such effect 
on State, local, and tribal governments, or on the private sector.

Paperwork Reduction Act

    This proposed rule contains no provisions constituting a collection 
of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501-3521).

Catalog of Federal Domestic Assistance

    There are no Catalog of Federal Domestic Assistance numbers and 
titles for this rule.

List of Subjects in 38 CFR Part 1

    Administrative practice and procedure, Archives and records, 
Cemeteries, Claims, Courts, Crime, Flags, Freedom of information, 
Government contracts, Government employees, Government property, 
Infants and children, Inventions and patents, Parking, Penalties, 
Postal Service, Privacy, Reporting and recordkeeping requirements, 
Seals and insignia, Security measures, Wages.

Signing Authority

    Denis McDonough, Secretary of Veterans Affairs approved this 
document on June 23, 2021 and authorized the undersigned to sign and 
submit the document to the Office of the Federal Register for 
publication electronically as an official document of the Department of 
Veterans Affairs.

Luvenia Potts,
Regulations Development Coordinator, Office of Regulation Policy & 
Management, Office of the Secretary, Department of Veterans Affairs.

    For the reasons stated in the preamble, the Department of Veterans 
Affairs proposes to amend 38 CFR part 1 as set forth below:

PART 1--GENERAL PROVISIONS

0
1. The authority citation for part 1 is revised to read as follows:

    Authority: 31 U.S.C. 3711(e); 38 U.S.C. 501, 5701(g) and (i); 38 
U.S.C. 5320.

Sec.  1.916   [Amended]

0
2. Amend Sec.  1.916 by revising paragraph (c) to read as follows:
* * * * *
    (c) Subject to the conditions set forth in this paragraph and 
paragraph (d) of this section, information concerning individuals may 
be disclosed to consumer reporting agencies for inclusion in consumer 
reports pertaining to the individual, or for the purpose of locating 
the individual. Disclosure of the fact of indebtedness will be made if 
the individual fails to respond in accordance with written demands for 
repayment, or refuses to repay a debt to the United States. In making 
any disclosure under this section, VA will provide consumer reporting 
agencies with sufficient information to identify the individual, 
including the individual's name, address, if known, date of birth, VA 
file number, and Social Security number.
    (1) The Secretary has established a minimum threshold for a debt, 
arising from a benefit administered by the Under Secretary for Benefits 
or Under Secretary for Health, that the Secretary will report to a 
consumer reporting agency under section 3711 of title 31.
    (2) VA will only report those debts that meet the following 
standards:
    (i) The debt is classified as currently not collectible. For 
purposes of this paragraph, the debt is currently not collectible if VA 
has exhausted available collection efforts, including, as appropriate, 
referrals for administrative offset and enforced collection;
    (ii) The debt is not owed by an individual who is determined by VA 
to be catastrophically disabled or has reported to VA a gross household 
income below the applicable geographically adjusted income limits that 
would entitle a VA beneficiary to cost-free health care, medications 
and/or beneficiary travel; and
    (iii) The outstanding debt amount is over $25, or such higher 
amount VA may from time to time prescribe, in accordance with section 
1.921 of this part.
    (3) The minimum threshold set forth in this paragraph will not 
apply if there is an indication of fraud, misrepresentation, or bad 
faith on the part of the individual in connection with the debt.
* * * * *
[FR Doc. 2021-15490 Filed 7-22-21; 8:45 am]
BILLING CODE 8320-01-P
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